Tesco Bank reopens current account paying 3% interest – but new applicants have hoops to jump through

Tesco Bank has reopened applications for its current account offering three per cent interest fixed for two years on balances up to £3,000.

The supermarket bank launched the account in February but pulled the offer eight days later after being swamped by a deluge of new customers - highlighting how starved savers are for a home for their cash.

In contrast, the best two year fixed-rate traditional savings account offers 1.8 per cent while the top easy-access comes with a 1.1 per cent rate.

However, despite Tesco bringing back the guarantee, it has added a number of caveats to the account which make it harder to bag the rate.

Current account: Tesco Bank pulled its three per cent interest guarantee in after just eight days - but has relaunched it today

The new conditions mean that to receive the guaranteed interest each month until April 2019, new applicants are required to put £750 into their account per statement month.

They must also have at least three direct debits paid out of the account per statement month, excluding direct debits to a Tesco Bank savings account.

These rules were not in place in February. It says existing customers and those who applied for the accounts two months are unaffected.

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HOW THIS IS MONEY CAN HELP

As well as the three per cent interest rate, customers can also build up Clubcard points when using their debit card.

David McCreadie, managing director of Tesco Bank, said: 'Given the unprecedented response to the initial offer we made in February, there are a number of conditions new customers must meet to qualify for the credit interest benefit of this current account offer.'

Tesco's move bucks a trend of current account providers slashing their rates or trimming back rewards in the low interest rate environment after the Bank of England base rate fell to 0.25 per cent in 2016.

Halifax has previously cut the £5 per month paid to its Reward current account customers who fulfil certain criteria to £3.

Santander has halved the three per cent rate on its flagship 123 current account to 1.5 per cent on balances up to £20,000.

Lloyds Bank has cut its Club Lloyds credit interest rate from four to two per cent while TSB reduced a five per cent rate on its Classic Plus account to three per cent.

Nationwide Building Society continues to offer customers five per cent on balances up to £2,500 for the first 12 months.

THE 5 PER CENT SAVINGS TRICK

If you're fed up with paltry savings rates an interest-paying current account could help you get better returns on your savings pot.

Savers can find accounts paying as much as 5 per cent, more than double offered on the leading short-term fixed rates.

The best interest-paying account for you will depend on the level of your balance and your monthly deposit amount.

Santander 's 123 Account pays to 1.5 per cent interest on amounts between £1,000 and £20,000, but it is still a top deal for anyone with a large balance.

It also pays up to 3 per cent tiered cashback on household bills, however it has a monthly charge of £5.

Nationwide FlexDirectpays 5 per cent interest on balances up to £2,500 - but this only for the first year. You must pay in a minimum monthly income of £1,000.

TSB's Classic Plus account offers 3 per cent interest on the first £1,500 in your account plus you get up to £10 each month if you maintain two direct debits from the account and make at least 20 debit card payments a month (until June 2018). The account requires a £500 monthly deposit,

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